State ex rel. Taylor v. Carolina Racing Ass'n, 308

• Decision Date: 10 November 1954
• Docket Number: No. 308,308
• Parties: STATE of North Carolina on the Relation of Wiley H. TAYLOR, Jr., v. CAROLINA RACING ASSOCIATION, Inc., the Town of Morehead City, and the Morehead City Racing Commission.
• Court: North Carolina Supreme Court

Page 390

84 S.E.2d 390

241 N.C. 80

STATE of North Carolina on the Relation of Wiley H. TAYLOR, Jr., v. CAROLINA RACING ASSOCIATION, Inc., the Town of Morehead

City, and the Morehead City Racing Commission.

No. 308

Supreme Court of North Carolina.

Nov. 10, 1954

Frank B. Aycock, Jr., Elizabeth City, for plaintiff relator, appellee.

John G. Dawson, Kinston, and Lucas, Rand & Rose, Wilson, for Carolina Racing Ass'n, Inc., defendant, appellant.

George H. McNeil, Morehead, for defendant Morehead City, appellant.

Harvey Hamilton, Jr., Morehead, for defendant Morehead City Racing Commission, appellant.

BOBBITT, Justice.

This Court has held: first, a purported contract imposes no binding obligations if its validity is dependent upon the provisions of an unconstitutional statute; and second, the provision of Art. I, Sec. 10, of the Federal Constitution, protecting the obligations of contracts against state action, is directed only against impairment by legislation and not by judgments of courts. State ex rel. Summrell v. Carolina-Virginia Racing Ass'n, 240 N.C. 614, 83 S.E.2d 501; Carolina-Virginia Racing Ass'n v. Cahoon, 4 Cir., 214 F.2d 830, and cases cited.

The constitutionality of G.S. § 19-1 et seq., has been tested and upheld as a valid exercise of police power. Carpenter v. Boyles, 213 N.C. 432, 196 S.E. 850; Barker v. Palmer, 217 N.C. 519, 8 S.E.2d 610; State ex rel. Summrell v. Carolina-Virginia Racing Ass'n, 239 N.C. 591, 80 S.E.2d 638.

Whenever it is adjudged that a nuisance as defined in G.S. § 19-1 is kept, maintained and exists, abatement by injunction as provided in G.S. § 19-2 is the statutory remedy. True, the effectual closing of the nuisance premises against use for any purpose is for one year, unless sooner released. G.S. § 19-5. The court may, if the owner appears and pays all costs of the proceeding and files an approved bond conditioned that he will immediately abate the nuisance and prevent its re-establishment within one year and satisfies the court of his good faith, cancel the order of abatement and deliver the premises to the owner. G.S. § 19-7. In the absence of such cancellation, the personal property seized by the sheriff is to be sold as in case of a sale under execution, the proceeds therefrom applied in payment of the costs of action and abatement, and the balance, if any, paid to the owner. G.S. §§ 19-5 and 19-6. No application for cancellation of the order of abatement under G.S. § 19-7 has been made. No application or order for sale of personal property under G.S. §§ 19-5 and 19-6 has been made. The rights of defendant under these statutes are available now upon its motion. While we deem it appropriate to advert to these statutory provisions, no assignment of error challenges the judgment of the court below for failure to accord the defendant its rights thereunder. Indeed, the statutes themselves are attacked as unconstitutional.

Is the Morehead City Act void as being in violation of limitations upon legislative power imposed by the Constitution of North Carolina? This is the question upon which decision here depends.

On the first appeal in the Summrell case, 239 N.C. 591, 80 S.E.2d 638, the defendant there contended that the constitutionality of the Currituck Act then under consideration was not before this Court for determination, relying largely upon Amick v. Lancaster, 228 N.C. 157, 44 S.E.2d 733. Bearing upon the question, this Court said: [239 N.C. 591, 80 S.E.2d 641]

'In Amick v. Lancaster, supra, the action was brought under G.S. § 19-1 et seq. The plaintiff sought to enjoin as a nuisance the operation of a liquor store by ''The Town of Louisburg Board of Alcoholic Control" pursuant to Ch. 862, 1947 Session Laws. The court held that since the alcoholic control board was acting 'under color of legislative authority' the remedy by action under G.S. § 19-1 et seq., 'seems inappropriate.' It is to be noted that the plaintiff in Amick v. Lancaster, supra, sought to enjoin the operations of a governmental board acting 'under color of legislative authority'. Whether the rationale of the decision would apply equally to a private person, firm, association or corporation is open to serious question. Be that as it may, the 1949 Currituck Act, Ch. 541, 1949 Session Laws, being unconstitutional and therefore void as declared in State v. Felton , 80 S.E.2d 625, there is error in the judgment below dismissing the action; and the cause is remanded for further proceedings.'

Further consideration convinces us that the ruling in Amick v. Lancaster, supra [228 N.C. 157, 44 S.E.2d 734], should be restricted to actions to enjoin the operations of a governmental board acting 'under color of legislative authority,' and should not be extended to actions to enjoin the operations of a private person, firm, association or corporation acting 'under color of legislative authority,' and we so hold.

We consider the Morehead City Act first in relation to these provisions of our fundamental law, set out under the caption 'Declaration of Rights', of the Constitution of North Carolina, viz.:

Article I, Section 7, which provides: 'Exclusive emoluments, etc.--No man or set of men are entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.'

Article I, Section 31, which provides: 'Perpetuities, etc.--Perpetuities and monopolies are contrary to the genius of a free state and ought not be allowed.'

In State v. Felton, 239 N.C. 575, 80 S.E.2d 625, where the 1949 Currituck Act was held unconstitutional, this Court held that betting on dog races under a pari-mutuel system having no other purpose than that of providing the facilities by means of tickets, machines, etc., for placing bets, calculating odds, determining winnings, if any, constitutes gambling within the meaning of the statutes presently codified G.S. §§ 16-1, 16-2, and § 14-292. We refer to the Felton case for a full discussion with citations of authority on this point. So, under the general statutes and upon the undisputed facts, the defendant was engaged in the business of operating a gambling establishment incident to its conduct of dog races, subject to abatement by injunction as a statutory nuisance under G.S. § 19-1 et seq., unless exempted from its application by the Morehead City Act.

The Morehead City Act, Ch. 540, Public-Local and Private Laws of 1939, was amended first by Ch. 75, Public-Local Laws of 1941, hereinafter called the 1941 amendment and later by Ch. 616, Session Laws of 1949, hereinafter called the 1949 amendment.

Section 1 of the Morehead City Act creates the Morehead City Racing Commission, consisting of three members. The original members are to be appointed by the Board of Commissioners of the Town of Morehead City, for one, two and three years, respectively, and at the expiration of the first term of each member his successor is to be appointed for a term of four years. In the event of a vacancy, the unexpired portion of his term shall be filled by the remaining members of the Commission; and in the event they cannot agree on the new member the Mayor of the Town of Morehead City is to act with them in filling the vacancy. The salaries of the members of the Commission are to be fixed by a committee of three, consisting of the Commission's chairman, the Mayor of the Town of Morehead City, 'and a duly authorized representative of the person, firm, or corporation or association to whom the franchise or privilege hereinafter referred to is granted.' (Italics added.) The Commission is directed to organize, elect a chairman, a vice-chairman and a treasurer. The treasurer is required to file with the Board of Commissioners of the Town of Morehead City a $5,000 bond for the faithful performance of his duties. The Commission is given authority to employ necessary clerical and legal assistance.

Section 2 vests in the Commission full authority 'to grant to any person, firm, association or corporation a franchise or privilege for a term of years, not to exceed ten, to construct, own, lease, operate and maintain a race course or driving park for trotting, pacing and running races for horses and dogs in the manner hereinafter set out.' Section 2(a) provides that no franchise or privilege shall be granted to a licensee unless and until the Commission is satisfied as to its 'financial responsibility and ability to comply with all the rules and regulations of the commission' and that it 'is fully able to financially and otherwise maintain and operate its properties in accordance with such rules and regulations as the commission shall from time to time prescribe.'

Section 2(b) provides that 'as a prerequisite to the issuance of the franchise or privilege, the said person, firm, association or corporation desiring said franchise or privilege shall at the time of making application therefor pay to the said commission the following charges or fees:

'First. For the franchise or privilege sought to be granted, a sum to be agreed upon as annual rental or lease for the grounds for the term of the franchise or privilege.

'Second. In the event such franchise or privilege is granted, the person, firm, association, or corporation shall also pay to the commission for each day or part of day during which races or racing is conducted, a sum equivalent to ten per cent (10%) of the gross receipted derived from all sources or operations connected with or incident to the operation of such races or racing conducted during such day or part of day. In no event, however, the amount so paid to exceed the amount of five thousand dollars ($5,000.00) per day and said amount to be paid in addition to any tax as may be now or hereafter fixed by law on such gross receipts.' The 1941 and 1949 amendments relate solely to this portion of the Morehead City Act. Originally, it was provided that in the event such franchise or privilege is granted, the licensee was required to pay to the...